Wholesale Sales and Inventories Rise Sharply in March

• Increase in inventories widespread.

• Largest monthly increase in sales since last July with upward revisions to February.

• With sales outpacing inventories, I/S ratios declined.

Wholesale inventories increased 1.3% m/m (4.5% y/y) in March on top of an upwardly revised 1.0% monthly gain in February (initially +0.6%). A 1.4% gain had been expected in the Informa Global Markets Survey. For all or Q1, inventories were up 3.7%.

Durable goods inventories rose 1.2% m/m (0.9% y/y) in March following an upwardly revised 0.8% m/m increase in February (originally 0.3% m/m). A 3.4% m/m increase in furniture inventories led the rise though the increases were widespread. Lumber inventories gained 2.8% m/m. Computer inventories increased 2.9% m/m in March on top of a 3.4% m/m gain in February. Inventories of motor vehicles and parts increased 1.0% m/m but were down 7.2% from a year ago. Nondurables inventories rose 1.4% m/m (10.2% y/y) in March after a slightly upwardly revised 1.2% monthly gain in February (originally 1.1%). Again, gains were widespread, led by a 2.7% m/m increase in apparel and a 2.2% rise in petroleum. This was the second consecutive meaningful monthly increase in apparel inventories, which had been falling since last June.

Wholesale sales jumped up 4.6% m/m (19.0% y/y) in March after having been unchanged in February (revised up from the originally reported 0.8% m/m decline). A 2.0% monthly increase was anticipated in the Action Economics Forecast Survey. Durable goods sales increased 3.7% m/m (17.8% y/y) in March following an upwardly revised 1.9% m/m drop in February (initially -2.2% m/m). Gains were widespread, led by a 10.3% m/m jump in metals sales, an 8.6% m/m increase in lumber sales and a 5.1% gain in furniture sales. Motor vehicle sales rebounded in March, rising 4.6% m/m after a 5.9% m/m decline in February. Nondurable goods sales soared 5.5% m/m (20.0% y/y) in March following an upwardly revised 1.8% monthly gain in February (initially 0.5%). The March increase was led by a 13.8% m/m surge in apparel sales after two consecutive monthly declines, a 10.8% jump in petroleum sales (still reflecting further price increases though not nearly as large as in January and February), and a 7.0% m/m increase in chemical sales.

With the rise in sales outpacing the increase in inventories, inventory-to-sales ratios declined. The aggregate I/S ratio declined to 1.22 in March, its lowest since September 2014 and well below the record of 1.66 set in April 2020. The durable goods I/S ratio declined to 1.52 in March from 1.56 in February while the nondurable goods I/S ratio fell to 0.95 in March, its lowest since December 2014, from 0.99 in February.

The wholesale trade figures are available in Haver's USECON database. The expectations figure for inventories is contained in the MMSAMER database. Expectations for sales are in the AS1REPNA database.